As the smoke clears from the battlefield of the 34-day war in Lebanon, it would be a mistake to count the cost only in fallen masonry and fresh graves. All is changed, changed utterly, by the defeat that the whole of Israel is now debating, from the cabinet through the lively press to the embittered reservists at the falafel stall. Practically the only person in the world who claims Israel won the war is George Bush - and we all know his definition of the words "mission accomplished".

Reports that the Hizbullah leader, Hassan Nasrallah, expressed regret this week at having underestimated Israel's reponse to the capture of two of its soldiers were misleading. In fact, Nasrallah thanked God that the attack came when the resistance movement was prepared, as he was convinced Israel would have otherwise invaded later in the year at a time of its choosing.

If the fierce thicket of the Iraqi resistance stopped the Bush war spreading to Syria then the extraordinary Hizbullah victory has surely made the world think again about an attack on Iran. But the main - and maybe the most welcome - shift in the 40-year-old paradigm of the Israeli-Arab conflict is the puncturing of the belief in a permanent and unchallengeable Israeli military superiority over its neighbours and the hubris this has induced in Israeli leaders - from the sleek Shimon Peres through the roughhouse of Binyamin Netanyahu to the stumbling Mr Magoo premiership of Ehud Olmert.